This module goes further into the question of mistakes and reasonable efforts. For authority we look to the words of Chief Justice John Roberts and his holding in Conkright v. Frommert, No. 08-810 (Apr. 21, 2010). To go even deeper we must turn to poetry and examine the opinion in Genworth Financial Wealth Management Inc. v. McMullan, 2010 U.S. Dist. LEXIS 53145, (D. Conn. June 1, 2010). The law knows that people not only make mistakes, they lie, steal, cheat and fake. Yes, the second half of this class is all stated in rhymes. You should study it closely to stay with the times.

People Make Mistakes

“People make mistakes.” This simple three word sentence is how Chief Justice John Roberts begins his opinion in Conkright v. Frommert, No. 08-810 (Apr. 21, 2010). He goes on to add: “Even administrators of ERISA plans.” Then he explains how complicated those plans can be. As a former ERISA litigator, I know he’s right, as I have read far too many ERISA plans myself. But let me tell you, as an attorney who left ERISA to focus solely on e-Discovery in 2006, it’s nothing compared to ESI plans.

As complicated as the facts and law are in employee benefits disputes, the world of electronic discovery with its ever-changing technologies is far more complicated. So if the Supreme Court is inclined to give ERISA administrators a break, which they did in Conkright, then surely they will do the same in e-discovery too, if and when such a case ever darkens their door. The Justices of the Supreme Court may not have a good grasp of today’s technology, but they do have a good grasp on human nature and the law. They know the proper standard for judicial review is reasonability, not perfection.

The lower courts should also recognize this simple truth, that people make mistakes, and so too do the computer systems they design and run. The law should never demand perfection. Judges need to better understand that this applies to the world of ESI spoliation and sanctions too. The law should only demand reasonable, good faith efforts to preserve, collect, review and produce. If these efforts are made, but mistakes still happen, for instance an email is not preserved, or a privileged document is produced when it should have been withheld, there should be no sanctions. The judges should recognize the limits of our humanity, and the enormous complexity of our task, as Chief Justice Roberts did in Conkright. They should temper their response accordingly.

In an era where vast amounts of electronic information is available for review, discovery in certain cases has become increasingly complex and expensive. Courts cannot and do not expect that any party can meet a standard of perfection.

Id. pg. 1. She then goes on to qualify that although perfection is not required, reasonable efforts are required, and the standards for acceptable practice have evolved quite a bit since she wrote Zubulake.

But sadly, not all judges get it. If any mistakes are pointed out to them, they rush to sanctions, sometimes even including waiver of the attorney-client privilege. In my opinion, that is what happened to the Venable law firm in Mt. Hawley Ins. Co. v. Felman Production, Inc., 2010 WL 1990555 (S.D. W. Va. May 18, 2010). They missed several attorney-client emails, and accidentally produced them, instead of withholding them. According to the court’s own findings of fact, the mistake was made primarily because of an error of some kind in the indexing of one of thirteen Concordance databases the firm was using to run this large project.

The Magistrate Judge who issued the ruling seemed to be motivated more by the contents of what she read in the emails, than by the law. She departed from the law’s demand of reasonability, not perfection. She glossed over the software failure (we all know that no software is perfect and all computers can and will fail), and instead focused on the law firm’s failure “to perform critical quality control sampling to determine whether their production was appropriate and neither over-inclusive nor under-inclusive, even though Venable was counsel in the Victor Stanley case.”

What does this mean? People make mistakes. In e-discovery, particularly in complex cases, as Feldman surely was, mistakes happen all of the time. So, unless you have a wise and forgiving technophobe like our Chief Justice hearing your case, or a technologically sophisticated jurist like Judge Scheindlin, you may be required to double-check your work with sampling before it goes out the door. This may be what is now necessary to protect yourself against the inevitable mistakes. If you don’t, and a mistake causes harm (or someone argues it does), you may be found to have acted unreasonably. You know that movants for sanctions will cite Felman and others to argue that it is negligent not “to perform critical quality control sampling.”

People may make mistakes, that’s ok. But if the person is a lawyer or technician in an e-discovery project, they may now be expected to do some sampling to try to catch their mistakes. I am not saying this is right or wrong, but it does seem to be a trend.

So must we all now practice defensively and sample everything? Not only that, must we carefully document our sampling and be prepared to share it someday with a skeptical court? Shall I start working on a new online course for law schools called Sampling 101?

Will our clients agree to pay for this added step in an already pricey process? Do they have any choice if they want to improve their odds of protecting their privileged communications?

What do you think? Should sampling now be a requirement for reasonability? Is it already a best practice? If so, for all cases or just a few? If just a few, which ones? Moreover, what does sampling cost? What does it entail? How many lawyers really know how to sample anyway? How many know the significance of the number 1537? Do you know what it means to have an estimate of +/- 5% with a confidence interval of 95%? Do you care? If so, see eg. the EDRM Search Guide Appendix on Sampling. Are all lawyers expected to know this stuff? Or just the ones that happened to be in Victor Stanley case?

ERISA lawyers have it easy. If you want a real challenge, become an e-discovery lawyer.

_______________

The Poetry of e-Discovery

As just shown the law accounts for the fact that we all make mistakes. The law does not punish if reasonable efforts are made, and the efforts are real, not fakes. I made a plea to all judges hearing sanction cases to remember that one error does not per se negligence make.

This module goes beyond simple mistakes into the dark worlds to celebrate the poetry of e-discovery. Although the law does not demand perfection, especially in complex discovery, it does require a full measure of forthright honesty. The law knows that people not only make mistakes, they lie, steal, cheat and fake. Our system of justice exists to discourage and punish lying, stealing, and the rest. Indeed, we lawyers are constantly dealing with the dark side of human nature, which explains why we are more jaded than the rest.

This brings me to a new case, the one that this blog will embrace: Genworth Financial Wealth Management Inc. v. McMullan, 2010 U.S. Dist. LEXIS 53145, (D. Conn. June 1, 2010). It also brings me to a bit of real poetry, the meta-theme of this module’s off beat reverie.

The lawyers, Bob, know too much.
They are chums of the books of old John Marshall.
They know it all, what a dead hand wrote,
A stiff dead hand and its knuckles crumbling,
The bones of the fingers a thin white ash.
The lawyers know a dead man’s thoughts too well.

First, to be clear, in discussing this case I am not accusing anyone here. I know too much for that. I have no personal knowledge of the facts. I will just report the written word of United States District Court Judge Vanessa L. Bryant. I may also add a few personal opinions of my own, but no assertions of fact. After a lifetime of working on cases like this, for both plaintiff and defense, I have no shortage of that. I know too much. Not knowledge like Sandburg thinks, from the old Learned Hand, but from experience with litigants just like this, over a thousand. Things have not changed that much from the times of Marshall and Lincoln, we old lawyers still know what most defendants are thinking. We know what goes on in their head. We know too much from both the living and the dead.

See here for my standard full disclaimer. Then listen to the judge and don’t blame me, blame her.

Court’s Statement of Background Facts and Procedure

In Genworth the defendants are accused of theft of trade secrets to solicit clients of their former employer. Plaintiff claims these acts are damaging, a real and potent destroyer. A violation of the Computer Fraud and Abuse Act, the Connecticut Uniform Trade Secrets Act, the Stored Communications Act, and Connecticut common law’s prohibition of tortious interference with business relationships. This is serious. It goes well beyond a case of loose lips.

Genworth, a financial services company, alleges that while defendants were still Genworth employees, they obtained copies of Genworth’s Automated Contract Tracking (ACT) database. This contains “client names, phone numbers, contact information, portfolio management history, and client notes.” Plaintiff claims that when defendants left their employment, they took plaintiff’s proprietary database with them, formed their own competing company, TJT Capital Group LLC (also a named defendant), and used the database to solicit hundreds of Genworth’s current and former clients. Defendants respond to these accusations with defiance. They deny the allegations of theft. The database, they say they left. They claim they obtained the client information by legal means and dowry, including Internet searches and a very potent memory.

Genworth naturally found out about defendants actions with haste, since it was, after all, their customers going to waste. Genworth’s counsel immediately sent out a preservation demand letter. This proved to be a good idea, hard to find one better. The letter instructed defendants to preserve all relevant electronically stored information. A demand clearly made in anticipation of litigation. Genworth soon thereafter filed suit. It then promptly propounded document requests seeking production of ESI and return of the stolen loot. The defendants made a production which pointedly omitted any email at all (yes, you read that right, none). Defendants also failed to produce any or all of the ACT database they allegedly stole, no byte of data, not a single one.

Plaintiff’s counsel reacted by seeking assurances from defendants’ lawyers. Assurances that forensic imaging had been undertaken. Plaintiff’s counsel raised many concerns, including, if I’m not mistaken, the automatic deletion of temporary and inactive files. Defendants’ counsel said no, they had no image made. Moreover, they had no intention to do so. Plaintiff’s counsel did not appreciate this hostile reply. He countered by seeking relief from the court nearby. He filed a motion, long in length and erudition:

… for a court order to compel the Defendants Timothy McMullan, James Cook, Timothy McFadden, Karen Bazon, Tamara Rivera, and TJT Capital Group LLC. (“TJT Capital”) to submit their computers and electronic media devices to forensic mirror imaging and examination by a neutral court-appointed forensic expert. The Plaintiff also seeks a court order for the preservation and production of evidence pursuant to Federal Rule of Civil Procedure 37(a)(5)(A) and Local Rule of Civil Procedure 37(c), and sanctions in the form of reasonable attorneys fees and costs associated with the Plaintiff’s motion.

This order contains the rulings made on these motions by Judge Bryant. After that, the defendants finally became compliant.

The Trial

The evidentiary hearing on the sanction motions took place on April 8, 2010 and April 10, 2010. The Plaintiff presented documentary evidence in support of its requests. Defendant McMullen was also called and testified regarding his handling of the Genworth client data. Genworth’s evidence included highly relevant emails produced under a subpoena by a non-party, the Charles Schwab Corporation, to two of the defendants. These emails were not produced by Defendants. By the way, this is the usual way you go about showing spoliation. You prove the party should have the ESI, since it was sent to or from them, suggesting they now lie about the whole problem.

Defendant McMullen tried to explain this non-production by a story of his honest efforts. He threw the PC in the trash, yes, but only did so to be compliant. He was just trying to do the right thing, not somehow be defiant. The offending computer had the secret ACT database on it, he’s not sure how or why, and, alas, when he threw in it the can, the emails were lost too. An honest mistake he claimed. He was not trying to hide the truth. Still, he admitted under oath that he may, just maybe, have thrown the computer away after the Genworth preservation demand letter. The plot now thickens, conjuring the old wisdom of Dickens who said: Lawyers hold that there are two kinds of particularly bad witnesses–a reluctant witness, and a too-willing witness.

Here is Judge Bryant’s interesting summary of the testimony and evidence presented at these hearings:

The Plaintiff presented evidence that Defendant Timothy McMullen, the principal of Defendant TJT, used his personal computer and personal e-mail address to download, access, and transmit the Plaintiff’s proprietary information without a scintilla of a reasonable expectation to his entitlement thereto or other legitimate justification therefore. Defendant McMullen, while testifying before this Court, admitted that he spoliated evidence when he discarded a personal computer, on which he admittedly accessed and transmitted Genworth’s proprietary information, in a trash can, hard drive and all.

He further testified that he discarded the computer after having been advised by counsel that he had no right to the Genworth data that he had downloaded while employed by Genworth.

The Plaintiff effectively impeached Defendant McMullen’s testimony through exhibits and testimony evidencing that he sent emails to Schwab from his personal email account and the personal computer after the date that he testified as having discarded the computer. Defendant McMullen falsely testified before this Court about the handling of at least one of the electronic devices from which the Plaintiff sought ESI production. Even if Defendant McMullen in fact discarded the computer as he claims, the timing of the computer’s disposal evidences a consciousness of wrongdoing as to his disclosure of Genworth information.

How would you rule if presented with evidence like that? I am reminded again of Charles Dickens: Dishonesty will stare honesty out of countenance any day in the week, if there is anything to be got by it. But wait, there’s more. Judge Bryant continues:

Furthermore, the Plaintiff has also introduced evidence of the voluminous and detailed nature of the client information at issue, undermining if not rendering utterly incredulous the Defendants’ contention that they recalled by memory and discovered through internet searches and other research the detailed client data, including the information that they allegedly conveyed to Schwab in anticipation of their departures. Moreover, the unique and detailed quality of the lists, which include idiosyncratic characteristics of the data undermine any credibility that the Defendants’ contentions might have had.

The judge, who listened to the testimony and observed the demeanor of the witnesses, not only concludes that the defendant lied under oath (falsely testified), but calls their defense utterly incredulous, which, as language buffs well know, is not the same thing as incredible. To buy the defense here would be a strain, even for the gullible.

Judge Bryant then succinctly summarizes the evidence and finds and holds that:

Genworth has alleged and provided evidence supporting its contention that the Defendants used “the computers, which are the subject of the discovery request, to secrete and distribute plaintiff’s confidential information” there is a sufficient nexus between Genworth’s claims and its need to obtain a mirror image of the computer’s hard drive, warranting the imaging requested by the Plaintiff. Ameriwood, 2006 WL 3825291, at *4. The Defendant McMullen’s admitted spoliation of incriminating evidence and Schwab’s disclosure of documents impeaching McMullen’s testimony that he discarded the computer lend further support.

Still, the defendants keep arguing and claim they should not have to pay for the forensic expert. Their grounds are that they already hired an expert. But wait until you see what they hired him to do. It took a lot of chutzpah to make that argument with a straight face, but Judge Bryant’s response quickly put them in their place:

The Defendants initially refused to image their computers and only retained a computer consultant to do so after the Plaintiffs’ motion for a neutral court-appointed expert was pending before this Court. The Plaintiff filed its motion only after seeking the Defendants’ agreement in ensuring forensic imaging of the devices in question. The testimony at the evidentiary hearing however reflects that the Defendants did not exercise diligence in imaging all relevant electronic devices, and instead selectively identified only certain TJT Capital business computers that were not used during the period of misappropriation activity that was alleged to have occurred while the Defendants were still employed by Genworth.

The totality of the circumstances under which the Defendants retained a forensic computer expert suggests an end run in furtherance of efforts by the Defendants to deny the discovery to which the Plaintiff is entitled. Moreover, the Defendants’ contention that they cannot afford to pay an expert is belied by their retention of their own expert while the motion for the appointment of a neutral expert for both parties was pending.

So they hired an expert to go around and image the computers they knew were clean, and kept him away from the real computers that mattered. Then they had the gall to complain about the costs of a forensic exam to uncover the evidence the defendants tried to destroy. Who thought that was a good idea to try to sell to the judge? I am reminded of another stanza from Carl Sanburg’s poem, The Lawyers Know Too Much.

In the heels of the higgling lawyers, Bob,
Too many slippery ifs and buts and howevers,
Too much hereinbefore provided whereas,
Too many doors to go in and out of.

But wait, there’s still another door. The defense lawyers also try to fight the forensic expense by pleading poverty, that the big plaintiff can afford to pay for it easier than they can. How do you think that higgling argument will go over at this point? Here is how Judge Byrant responds:

In further objection to the appointment of a forensic expert, the Defendants cite expense and the relative financial ability of the parties to pay the cost of such an expert. [Doc. #42]. But yet it is the Defendants’ apparent deceit, obstreperousness and destruction of relevant information, that the Defendants were required to maintain and preserve, that necessitates the retention of a neutral forensic computer expert to ascertain what, if any, data existed on any and all computer and electronic storage devices to which the Defendants had access during the relevant period. In light of the Defendants’ culpability in necessitating the expense of a neutral expert, the cost for the appointment of a neutral forensic expert is to be borne 80% by the Defendants and 20% by the Plaintiff.

The only thing I find mysterious about that ruling is why the plainitff’s were required to pay anything at all, but then courts’ usually split the costs of these forensics 50/50 or make the requesting party pay. By the way, for you vocab fans, obstreperousness is another great word to know. It basically means noisy defiance, a really bad show. Not a good thing to do to a federal judge. The may remember and hold a grudge.

Obviously defense counsel here are not among the early adapters of The Cooperation Proclamation. Too bad. A cooperative approach could have saved their clients a lot of time and money. They have not learned the lesson that it is sometimes its better to forego the stick and use the honey. But then again, if that had happened here, this opinion would not be so funny.

Here is what Judge Bryant thinks:

The Court further notes that the Plaintiff’s motion for sanctions is warranted by the fact that it had to seek Court orders to obtain that to which it has been entitled but which the Defendants unreasonably and dubiously refused and possibly intentionally made unavailable. The Defendants were wholly unjustified in their position as they tacitly admitted by finally hiring a computer imaging expert. The Defendants have wasted the Plaintiff and the Court’s resources in necessitating the judicial resolution of this discovery dispute.

Possibly intentionally made unavailable, is a statement likely indeed to be unassailable. This all means the judge has concluded defendants intentionally hid the ball, and so now that is how the gavel must fall.

The Order

The Court concludes by providing the plaintiff with all of the relief it requested, including appointment of a neutral forensic expert, production of all computers to the expert for imaging, delivery of information recovered to defense counsel for first review for relevance and privilege, followed by production of the ESI to plaintiff, and an award of attorneys fees and costs. The plaintiff here wins, a new expert begins, and the defense? Well, it takes a hit on the shins.

The Law

Judge Bryant analogized the facts before her to those in Ameriwood Industries Inc. v. Liberman, 2006 WL 3825291, at *3, *6 (E.D. Mo. Dec. 27, 2006), amended by 2006 WL 685623 (E.D. Mo. Feb. 23, 2007). In Ameriwood, like Genworth, the computers the plaintiff sought to image and examine were alleged to have been used in connection with the plaintiff’s claims — in this case, trade secret violations. This factor, along with the extreme facts, superseded the defendants’ privacy concerns.

Judge Bryant first noted that a party requesting ESI discovery is not normally “entitled ‘to a routine right of direct access to a party’s electronic information system, although such access might be justified in some circumstances.’” The court focused on the analysis in Ameriwood, which involved similar alleged violations of the Computer Fraud and Abuse Act by former employees who started a competing company. In Ameriwood the court ordered the creation and examination of images of the former employees’ computer hard drives after evidence showed that the defendants intentionally withheld all responsive documents. In balancing the privacy interests of the defendants in their computer data against their alleged bad faith behavior, the court held that the use of the particular computer in the alleged fraud was a key element: “[A]llegations that a defendant downloaded trade secrets onto a computer provide a sufficient nexus between the plaintiff’s claims and the need to obtain a mirror image of the computer’s hard drive.” Id.

Judge Bryant in Genworth held that the similarities between the facts in this case and Ameriwood suggested that similar remedies were appropriate. Judge Bryant held that full imaging and forensic examination of the defendants’ ESI sources was warranted, She explained that Genworth “has exhaustively established that forensic imaging by a neutral expert is the only way that the Plaintiff will be able to secure the electronic data to which it is entitled.” Judge Bryant pointed to the lack of any reasonable justification from the defendants for transmitting Genworth’s proprietary data to their personal computers, or for throwing McMullen’s computer into a trash can. She noted that “the timing of the computer’s disposal evidences a consciousness of wrongdoing as to his disclosure of Genworth information.” Thus ends the Court’s castigation.

Concluding Poem

I am reminded of a poem written by one of my students below. It is perhaps the first of its kind in a new genre of post-modern literature: e-discovery poetry. I encourage my students to write and leave here their own legal poems; I make this a general plea. Be brave and join with me. Have courage to sing the body electric of legal discovery. It does not have to meet the high standards of W. H. Auden, shown right, or his great poem Law Is Love. Obviously my low writing in this module is far from the above. I only ask that your contributions in some way, or degree, pertain at least obliquely to the noble art of e-discovery.

SANCTIONS

Temporary internet files,
Store records that go on for miles,
To delete them is fair,
If no reason is there,
to think they could be used in a trial.

Lawyers often think about spoliation,
of evidence which has no relation.
But if the files the parties erase,
were important to the case,
then the judge may give consideration.

The judge may take into account,
the production cost and amount,
the importance of documents sought,
and whether they’re accessable or not,
to determine if sanctions can mount.

But at the end of the day,
the Defendants will pay,
If after the litigation is pending,
its employees are deleting or amending.

SUPPLEMENTAL READING and EXERCISE:Write your own poem about e-discovery, preferably one with a sanctions theme. If it turns out really good, share it below with the whole team.

Another Not-So-Poetic Assignment. Find the article where Craig Ball writes about disk-wiping (all-zeros) and in effect says you only have to do it once to be effective, not multiple times. Find at least one seemingly very authoritative source that disagrees. Who do think is right, and why?

Students are invited to leave a public comment below, or even a poem. Insights that might help other students are especially welcome. Let’s collaborate!

Copyright Ralph Losey 2015

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Ralph Losey is a practicing attorney who specializes in electronic discovery law. He is a principal in a U.S. law firm with over 50 offices & 800 lawyers where he supervises electronic discovery work and litigation support.
Ralph has written over two million words on law and technology, including six books on electronic discovery. His latest books are "E-Discovery for Everyone" (ABA 2017) and "Perspectives on Predictive Coding" (ABA 2017) (ed. & contributor). His blog is widely read in the industry: "e-DiscoveryTeam.com."
Ralph is the founder and principal author of "Electronic Discovery Best Practices" and "e-Discovery Team Training," a free online course covering all aspects of e-discovery. Ralph's sub-speciality is the search and review of electronic evidence using multimodal methods, including artificial intelligence. He also has a free online training program to teach these advanced methods - the "TAR Course."
Ralph has devoted a month of his time each year since 2013 to research and test various AI-enhanced document review methods. In 2015 and 2016 Ralph and his Team participated in the TREC Total Recall Track experiments sponsored by the National Institute of Standards and Technology.
Ralph has been involved with computers and the law since 1978. His full biography is found at RalphLosey.com.
Ralph is the proud father of two children, Eva M. Losey and Adam Colby Losey, a high-tech lawyer married to another e-discovery lawyer, Cat Jackson Losey, and, best of all, Ralph has been married since 1973 to Molly Friedman Losey, a mental health counselor and life-long friend.

5 Comment on “Sec. 5 – Mod. C”

I never presumed Mr. Losey a poet
The defendant’s a** was grass and Judge Bryant needed to mow it.
With information and identity theft abounding
A personal computer in the trash has a “WTF” resounding
The cost of a forensic expert was too expensive??
As a service provider, that’s down-right offensive.
When will Counsels abandon this type of gamesmanship and tactic?
Shouldn’t repeated sanctions make them anaphylactic?
Please forgive my simplistic, Suess-like cadence. Clearly, I never earned my “poetic license”
After all, I’m a product of a Florida state school where I spent much of my time on a barstool.